AgustaWestland: One arm of MoD disagrees with another over price and policy

The PAC had sent the MoD detailed questions on alleged lapses listed by the Comptroller and Auditor General (CAG) in its 2013 report in which the auditor rejected the Ministry’s explanation as “not acceptable’’

A blame game is on in the Ministry of Defence over the 2010 purchase of AgustaWestland VVIP helicopters which is now the subject of an ongoing probe by the Central Bureau of Investigation for alleged payoffs.

Records accessed by The Indian Express show that in replies to the Public Accounts Committee (PAC), the MoD’s Finance unit has strongly disagreed with the Ministry’s bid to defend the huge cost escalation and alleged violations in procurement in the Rs 3,727-crore deal which has now been cancelled.

The PAC had sent the MoD detailed questions on alleged lapses listed by the Comptroller and Auditor General (CAG) in its 2013 report in which the auditor rejected the Ministry’s explanation as “not acceptable’’ and called the final purchase price for the 12 AW-101 helicopters “abnormally high.”

Surprisingly, last month, the MoD’s Finance wing (with approval of the Financial Advisor, Defence Services) itself questioned the stand taken by the Ministry and Air Headquarters, in particular, in replies drafted for the PAC.

The Finance Wing has now put on file that terms of the DPP (defence procurement policy) were “apparently not complied with’’ and that no cost details were available based on RFIs (request for information) issued by Air HQ when the procurement process was on. This is exactly what the CAG said.

That’s not all. According to a noting on July 23, the MoD’s Finance wing has said that even if the CAG’s estimate of $21 million as the cost of one chopper — sourced from Wikipedia — was “unrealistic’’ according to the Defence Ministry, the website cited by Air Headquarters (deagel.com) also shows the cost of a chopper, as late as April 2014, to be $27 million.

The note says: “Therefore, while the cost in (the) website referred by CAG has been negated in the reply as unrealistic, based on this premise the same cannot be ground for justification for the website referred by the Air HQ…the reply (does) not refute the point made by CAG that there was no clear reference base to arrive at a realistic cost.’’

In its scathing report on the AgustaWestland deal, the CAG had claimed that the benchmarking committee had first used the price plucked from the internet as $27 million in 2000, then added inflation and escalation costs to take it up to $47 million in 2010 and, finally, set it at $67.4 million throwing in additional fitments and self-protection suits.